How Not to Be Broke—10 Powerful Books to Learn about Money Management

Let’s face it: only few people in the world actually know how to manage money. We think we know how to do it, but if we actually did, banks wouldn’t have created credit cards. I was curious to know more about the things that matter in life, and given that money can enhance how we experience our lives, I started reading books related to money management. The following 10 books are certainly worth reading before you pick up your next novel.

This is undoubtedly a book that will make you re-think what you do with each coin you earn. If you make a small investment in this book and apply each of the “6 laws of wealth,” it will take you down the road to financial success.

This book takes place in Ancient Babylon. You may think, “What? A money-management book about Babylon?” Well, it turns out that Babylon was one of the richest civilizations that has existed.

If you have ever read or listened to Jim Rohn, he mentions that this book was a great part of him becoming millionaire. Jim Rohn also has an awesome book that you will see as part of these top 10.

So, what can you expect of this book? You will learn to keep more of what you earn, earn from your savings, get out of debt, invest wisely, earn more, and keep your fortune safe.

This is a classic, and it blew my mind when I was in high school. I read the Spanish translation of course, and I’ve read it again in English, and it just doesn’t stop making sense. Now, you will find this book very easy to read and you may get lost in the story and forget to take in the great message.

Robert Kiyosaki is famous for his book Rich Dad Poor Dad in which he talks about two people giving him different advice. One of them advises him on entrepreneurship and how to be financially independent, and another one teaches him how stay financially safe.

In this book, he expands on the rich dad’s advice to become financially independent, touching on the difference between being a business-owner and being self-employment, and how to accelerate the cash flow to breakthrough to financial independence.

This is a highly recommended book for those looking to start a business or thinking of investing their money wisely.

I read this book when I was starting up my business. It was one of the best books I’ve ever read. This book provides research on over 40 millionaires and how they got there. I’ve read this book twice simply because, as with anything else in life, what this book teaches is a process.

Think and Grow Rich will lay out for you the steps to becoming a millionaire. Now, I should say this: it is not easy at all. If it was easy, everybody who read this book would be rich. It takes consistency and hard work, but reading this book is the first step.

If you’ve never heard of Jim Rohn, it’s probably because he hasn’t been involved in entrepreneurship much lately. Well, Jim Rohn was a great public speaker, motivator and the mentor of Tony Robbins. He is a self-made millionaire who, after being broke, put all he had into making himself rich and happy.

In this book, Jim Rohn shows the steps you need to take to live a better life—not just financially. This book will teach you how to set goals, seek the right path for yourself, seek knowledge and finally, control your finances the right way.

This book is a great, all-around opportunity for life improvement. See, life is not all about money; money just enhances life, and that’s why you must learn how to manage it properly. Your personal improvement is what will take you to where you want to be.

Just like Tony Robbins, Darren Hardy mentions Jim Rohn as a mentor. Given that Jim Rohn (cited above) wrote one of the best books regarding money management and life, I don’t wonder how Darren Hardy came up with this great success-related book full of easy, small hacks that will get your life on the right path to wealth and improvement.

If you are looking for a grounded opinion on how to manage money and achieve success, this is the right book for you.

There is a saying that you shouldn’t judge a book by its cover. Well, this what I did with this one, and it was well-worth the judgement.

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This is a great book full of easy-to-follow ideas that you can really get to work. It has great tips, like coming to an understanding with your family regarding money matters, teaching your kids how to use it properly, etc.

This is a great book for those with families (like me). It’s definitely worth the read.

OK, this one is a real taking-action book. It shows you how, in seven days, you can get things out of the way and get onto the road of money management. This will take you by the hand on getting things done.

This is not a good read—it’s a good money-management manual. If you want to start from anywhere, start from here.

All the books up to number 5 were about how to get money and manage it, whereas number 7 was about getting to manage what you have in 7 days. But, what if you don’t have any money?

This is where this book comes in. It is a great read when you are struggling to get by on a monthly basis. This book works on your beliefs more than your actions. So, if you are looking to really change your perspective and get your finances right, this is the place to start.

Financial freedom is the final goal and worrying is the usual struggle. Here, they meet together. Suze Orman sets out a plan for financial freedom and an ease for your worries. What else could you want?

The author uses 9 steps for you to work on your finances, starting with your understanding of behavior, family and money. This book will create a great mindset and help you understand how you use money in your life and how it affects almost everything you do.

This is a question I’ve asked myself many times. Why is it that in school, they never teach you anything about money management? Everything starts from, as the author says, marrying the right person—they don’t need to be wealthy or a genius, but rather, someone who uses money effectively. Another option is to, of course, become educated together as you go. This is a great read for those in relationships or with a family.

There you have it: 10 powerful books that will teach you and help you achieve your financial goals in life.

Now, everything won’t fix itself just by reading; you have to, in fact, take action. As I always mention to any of my students, this is what makes the difference in everything we do in life. Action! It doesn’t need to be perfect—and never will be—but it will surely make a difference once you start applying some these teachings.

How to Set Financial Goals and Actually Meet Them

Finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. And that’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways on how to set financial goals and then actually meet them with ease.

Table of Contents

5 Steps to Set Financial Goals

Though setting financial goals might seem to be a daunting task but if one has the will and clarity of thought, it is rather easy. Try using these steps:

1. Be Clear About the Objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream. And this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore if you are saving today, then you should be crystal clear about what it is for. It could be anything like kid’s education, retirement, marriage, that dream vacation, fancy car etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives, however small they may be, that you foresee in the future and put a value to it.

2. Keep Them Realistic

It’s good to be an optimistic person but being a pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going out of the line will definitely hurt your chances of achieving them.

It’s important that you keep your goals realistic in nature for it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said – “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman”. And this quote sums up the best what inflation could do your financial goals.

Therefore account for inflation whenever you are putting a monetary value to a financial objective that is far away in the future.

For example, if one of your financial goal is your son’s college education, which is 15 years hence, then inflation would increase the monetary burden by more than 50% if inflation is mere 3%. So always account for inflation.

4. Short Term vs Long Term

Just like every calorie is not the same, the approach towards achieving every financial goal will not be the same. It is important to bifurcate goals in short term and long term.

As a rule of thumb, any financial goal, which is due in next 3 years should be termed as short term goal. Any longer duration goals are to be classified as long term goals. This bifurcation of goals into short term vs long term will help in choosing the right investment instrument to achieve them.

More on this later when we talk about how to achieve financial goals.

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5. To Each to His Own

The journey of setting financial goals is an individualistic affair i.e. your goals are your own goals and are determined by your want to achieve them. A lot of times we get on the bandwagon of goal setting only to realize later on that it was not meant for us.

It is important that your goals are actually your goals and not inspired by someone else. Take a hard look at this step at all the goals you’ve set for after this step, you will be on the way to achieve them.

By now, you would be ready with your financial goals, now it’s time to go all out and achieve them.

11 Ways to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a 2 step process –

Ensuring healthy savings

Making smart investments

You will need to save enough; and invest those savings wisely so that they grow over a period of time to help you achieve goals. So let’s get down to ensuring healthy savings.

Ensuring Healthy Savings

Self realization is the best form of realisation and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your monthly expenses. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you would be surprised to see how small expenses add up to a sizeable amount.

Also categorize those expenses into different bucket so that you know which bucket is eating the most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pump up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classical mistake which almost everyone of us do. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world i.e. we should be taking out the planned saving amount first and then manage all the expenses from the rest.

The best way to actually implement is to put the savings on automatic mode i.e. money flowing automatically into different financial instruments (for example – mutual funds, retirement corpus etc) every month.

Taking the automatic route will make us lose control of our money and hence will compel us to manage in what’s left with us thereby increasing the savings rate.

3. Make a Plan and Vow to Stick with It

Budgeting is the best to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be made.

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Nowadays, several money management apps and wallets can help you do this automatically. It’s easy and who knows, you may just end up doing what people fail to do.

At first, you may not be able to stick to your plans completely but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Rise Again Even If You Fall

Let’s be realistic. It’s not like the world will come to an end if you made one mistake. This isn’t called leniency but discipline.

If you fail to meet your budget for a month, don’t give up the entire effort just like that. Instead, start again.

Remember that flexible plans are the most realistic plans. So go forward and try to follow your financial goals as planned but if for some reason, the plan gets out of hand for you, do not give up on it just yet. This has a lot to do with your psychology rather than any material commitment.

All you have to do is to stay on the road and vow to stay on it, no matter how much you fall down.

5. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make Savings a habit rather than a goal. While it might seem to be counter intuitive to many but there are some deft ways of doing it. For example:

Always eat out (if at all) during weekdays rather than weekends. Usually weekends are expensive. Make it a habit and you would in turn be saving a great deal.

If you are travelling buff, try to travel during off season. Your outlay will be much less.

If you go out for shopping, always look out for coupons and see where can you get the best deal.

So the key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice which will be harder to sustain over a period of time.

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6. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission. And it would be rather easy to lose the grip over your discipline.

Therefore in order to stay the course, it is advisable that you keep yourself surrounded with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

7. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

So if you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

Use this journal to write down all essential points such as your short term, mid term and long term goals, your current sources of income, your regular expenses which you are aware of and any committed expenses which are of recurring nature.

When you have a written commitment on paper, you are going to feel more energised to follow the plan and stick to it. Moreover, it is going to be a lot more easier for you to follow you and track your progress.

At this point, you should be ready with your financial goals and would be doing brilliantly with savings; now it’s time to talk about the big daddy – Investments.

Making Smart Investments

Savings by themselves don’t take anyone too far. However savings when invested wisely can do wonders and we are at that stage where we will talk about making smart investments.

8. Consult a Financial Advisor

Investments doesn’t come naturally to most of us therefore rather than dabbling with it ourselves, it is wise to consult a financial advisor.

Talk to him/her about your financial goals and savings and then seek advice for the best investment instruments to achieve your goals.

9. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about them.

Just like “no one is born a criminal”, no investment instrument is bad or good. It is the application of that instrument that makes all the difference.

Do you remember we talked about bifurcating financial goals in short term and long term?

It is here where that classification will help.

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So as a general rule, for all your short term financial goals, choose an investment instrument that has debt nature for example fixed deposits, debt mutual funds etc. The reason for going for debt instruments is that chances of capital loss is less as compared to equity instruments.

10. Compounding Is the Eighth Wonder

Einstein once remarked about compounding,

Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.

So make friends with this wonder kid. And sooner you become friends with it, quicker you will reach closer to your financial goals.

Start investing early so that time is on your side to help you bear the fruits of compounding.

11. Measure, Measure, Measure

All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments; taking stock of how our investments are doing.

If there is one single step where everything (so far) can go wrong, it is at this step – Measuring the Progress.

If we don’t measure the progress timely, then we would be shooting in the dark. We wouldn’t know if our saving rate is appropriate or not; whether financial advisor is doing a decent job; whether we are moving closer to our target or not.

Do measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

The Bottom Line

This completes the list of tips for you to set financial goals and actually achieve them with not so great difficulty.

As you can see, all it requires is discipline. But guess that’s the most difficult part!